If you've recently been involved in an accident where your vehicle was badly damaged, you may be wondering how much insurance pays for a totaled car. They will declare your car totaled if it's not worth the cost to repair it. Each insurance provider has a formula for determining whether or not to total your car. This formula may vary from one provider to the next, but not by much. There are three main factors that insurance companies use to decide when to total a vehicle. They are:

If the damage is severe and the vehicle can't be safely repaired, it's considered totaled.

If it will cost more to repair your vehicle than it's worth, they will total it.

State regulations may dictate the amount of damage your vehicle can have before it's totaled.

Being involved in an accident is stressful enough. Arm yourself with information so you can be well-prepared for dealing with your insurance provider when and if your car is totaled.

How Much Is Your Totaled Car Worth?

To get an idea of what your totaled car is worth, find the Kelley Blue Book value for it in fair condition. Figure out what the 20 to 40 percent fair condition value is. Depending on the amount of damage done to your vehicle, it's likely going to be closer to the 20 percent range, according to CarBrain. This gives you an idea of what your totaled vehicle is worth.

Although, you should keep in mind that there's no clear-cut method for determining the value of your totaled vehicle. In the end, it's up to the adjuster, but it may be open to discussion.

An adjuster will be sent by your insurance provider when you report an accident to them. They will assess the damages done to your vehicle to determine whether or not it will be considered a total loss. If they do decide it's totaled, they will appraise its value based on its condition immediately before the accident occurred. A third-party adjuster will also be consulted to ensure that a fair price is given. The insurance company will consider the actual cash value given by both adjusters to decide what your vehicle is worth.

Investopedia explains that the actual cash value (ACV) is the resale price of your vehicle before it was involved in a major accident. The insurance company will search recent sales in your area of vehicles similar to yours and compare them to current listings to find your car's ACV. They will also consider your car's trim level, options, mileage, and pre-accident condition when determining the ACV. You also have to keep in mind that your deductible will be subtracted from the amount the insurance company pays out for your totaled vehicle.

Typically, you can expect payout for your totaled vehicle within a few days after the ACV has been determined. There are two instances where you may not receive money for your totaled vehicle:

If you lease

If you have a loan

The insurance company will pay the amount you owe to your loan provider. If there is anything left, you get the rest. If you leased your car, the same thing applies. You can consult your adjuster to find out when you can expect payment. They should also know how long the insurance company will pay for the rental car, if one was provided.

Understanding Your Coverage

In order for your car to be covered by insurance when it's totaled in an accident, you need to have the right insurance coverage. Both Policygenius and The Balance recommend that you include GAP insurance on your policy if you want the difference between what you owe on your vehicle and what the insurance company pays out for it in the event that it's totaled covered.

GAP is an acronym for Guaranteed Auto Protection, and it's good to have if you owe more for your car than it's worth. Unfortunately, you won't ever see the money from having this type of coverage, as it all goes directly to the lender in the event your car is totaled. This will keep you from having to continue making payments on a car you no longer own.

Insurance.com shares that some insurance companies offer guaranteed replacement coverage. While some providers will replace your car if it's less than three years old, having this type of coverage means you don't have to worry about the payout amount for a totaled car. Your new car will be covered. However, even if you don't have guaranteed replacement coverage, insurance companies are obligated to "make you whole." This means they have to pay you the ACV of the totaled vehicle minus the deductible.

What Happens to a Totaled Car?

When your car is totaled, one of two things can happen:

It's auctioned off to a salvage yard.

You keep it and repair the damages.

Most often, a totaled vehicle will be auctioned off to a salvage yard and the insurance company will keep the money from this sale. If you are permitted by law to keep your totaled vehicle, the insurance company will get bids from different salvage companies and set the fair market value from these bids. This amount will be deducted from the payout they provide to you.

The title will have to be changed to a salvage title, as this is a requirement in most states. This means you can't get license plates until you make the necessary repairs and apply for a new title. You should consult your insurance provider about the laws on a salvage title in your state before you decide to keep your totaled vehicle. Cars with rebuilt titles are more difficult to insure, especially if you want comprehensive or collision coverage.

If you're involved in an accident that's your fault, you can expect your insurance premium to increase. This is true whether your car is damaged or totaled. You should compare insurance rates from several companies if you find your rate gets too high. No two companies set their rates the same way, so shopping around can potentially save you a good deal of money.

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